Canadian Financial Planners Update Long-Term Projection Assumptions
Event summary
- FP Canada and the Institute of Financial Planning jointly released the 2026 Projection Assumption Guidelines for Canadian financial planners.
- The guidelines provide assumptions for inflation, salary growth, shelter appreciation, and asset returns over a 10+ year horizon.
- New guidance addresses shelter projection considerations, incorporating data from CMHC and global research.
- Updated mortality tables now include assumptions for same-sex couples, improving longevity estimates.
- The guidelines are accompanied by an Addendum detailing data sources and a correlation matrix of asset class returns.
The big picture
These guidelines represent an effort to standardize long-term financial planning assumptions in Canada, aiming to reduce bias and improve the consistency of client advice. The emphasis on housing costs reflects the significant impact of real estate on Canadian household finances. The updates to mortality tables underscore a broader trend towards inclusivity and accuracy in financial planning models.
What we're watching
- Housing Volatility
- The reliance on CMHC data for shelter projections introduces a potential vulnerability if housing market conditions deviate significantly from current expectations, requiring planners to adjust assumptions frequently.
- Mortality Risk
- The inclusion of same-sex couple mortality data may necessitate adjustments to actuarial models and planning strategies, particularly for firms with a significant clientele in this demographic.
- Inflation Persistence
- The 2.1% inflation assumption could prove overly optimistic if inflationary pressures persist, forcing planners to revisit long-term projections and potentially impacting client outcomes.
Related topics